Input Aggregation and Firm Efficiency
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Author
Thomas, Arthur C.
Tauer, Loren W.
Abstract
Technical efficiencies calculated using aggregated inputs are biased. It is shown empirically and analytically that input aggregation decreases calculated technical efficiencies and changes relative technical efficiencies among firms. Moreover, aggregation fails to separate technical efficiency effects from allocative efficiency effects. Thus, the calculated efficiencies are more properly economic efficiencies.
Date Issued
1989-06
Publisher
Charles H. Dyson School of Applied Economics and Management, Cornell University
Type
article